Wednesday, March 31, 2010

Pakistani Chief Judge's Anti-Corruption Campaign

Led by Chief Justice Iftikhar Chaudhry, the judges of Pakistan Supreme Court have overturned former President Musharraf's amnesty order for 8000 top politicians, including current President Asif Ali Zardari, and declared jihad against corruption at the highest levels of government.



Pakistani judiciary's battle against rampant corruption has recently escalated with the jailing of a top serving police official at the Federal Investigation Agency (FIA), and the ultimatum to the anti-corruption chief of the National Accountability Bureau (NAB) to reopen domestic and international corruption cases against the beneficiaries of the NRO amnesty, or be prepared to go to jail.

Some critics of the Supreme Court actions see the top court's recent orders against top officials as abuse of power by Mr. Iftikhar Chaudhry, the head of the unelected and independent judiciary in Pakistan. They accuse the Chaudhry court of engaging in unwarranted judicial activism designed to usurp the powers of the elected legislature and executive branches.

Unfortunately, Pakistan continues to have the dubious distinction of being among the 50 most corrupt countries on a list of 180 nations ranked by Transparency International in 2009. Under the current PPP government, Pakistan has slipped 5 places to being 42nd most corrupt from 47th last year. By contrast, India is ranked much better as the 84th most corrupt country.

While I have been critical of some of Justice Chaudhry's behavior in the past, I have now concluded that judicial activism to fight high-level corruption is necessary, at least in the near term. However, I do expect that there will be both positive and negative consequences of the judiciary-led war on corruption in Pakistan.

The most likely upside to come from the court actions is that the politicians and bureaucrats will be forced to think twice before they demand to be paid off in exchange for illegal favors. The activist top court judges will certainly help reduce the current high levels of corruption among the top leaders, and help set a better tone for their underlings in positions of power.

The negative consequences of the court actions include a gross imbalance of power and a continuing institutional confrontation between the judicial and executive branches of government. An extended struggle may prove detrimental to better governance, and possibly open the way for another military intervention in the country.

Lt us hope that good sense will prevail to ensure that long-term positives will significantly outweigh the short-term negative consequences of the powerful judges' war on deep-rooted and highly corrosive corruption in Pakistan.

Related Links:

Haq's Musings

Justice Chaudhry's Address to New York Bar

Incompetence and Corruption in Pakistan

Zardari Corruption Probe

NRO Amnesty Order Overturned

Transparency International Rankings 2009

Tuesday, March 23, 2010

Judging Indian Democracy on Right to Food

There is no basic human right more important than the right to adequate food. This right is recognized as a basic human right within the U.N. Universal Human Rights framework. Specifically, the Universal Declaration of Human Rights (UDHR) (U.N. 1948), Article 25, states that “Everyone has the right to a standard of living adequate for the health and well-being of himself and his family, including food.”

In practice, however, the right to food is widely ignored by the most vociferous human rights campaigners, as well as the leaders of the world's largest democracy in India. This is particularly true when the critics compare human rights records of India and China. The harshest criticism by various human rights groups is reserved for China, while India gets only a minor slap on the wrist for its most egregious violations of basic human right to food, shelter, clothing, health and education.



Since 2001, even the Indian Supreme Court has upheld the right to food as a basic human right, and demanded that the government provide a hot lunch to every Indian schoolchild. On paper, 120 million Indian children receive this benefit ordered by the apex court.

Has anything changed on the ground since that historic ruling? To answer this question, let's look at some recent data.

In IFPRI's most recent global hunger report, India still ranks at 65, worse than Pakistan at 58, and much worse than China at 5.

The first India State Hunger Index (Ishi) report in 2008 found that Madhya Pradesh had the most severe level of hunger in India, comparable to Chad and Ethiopia. Four states — Punjab, Kerala, Haryana and Assam — fell in the 'serious' category. Gujarat, 13th on the Indian list is below Haiti, ranked 69. The authors said India's poor performance was primarily due to its relatively high levels of child malnutrition and under-nourishment resulting from calorie deficient diets.

In its latest issue, the harsh reality of hunger and malnutrition in India is described by the Economist magazine as follows:

"India-wide, more than 43% of Indian children under five are malnourished, a third of the world’s total. Over 35% of Indians are illiterate and over 20m children out of school. For all its successes, including six decades of elections and a constitution that introduced the notion of equal rights to an inequitable society, India’s abiding failure is its inability to provide aid and economic opportunity to millions of its impoverished citizens."

According to World Bank's HNP (Health and Nutrition) paper "India's Undernourished Children", here is some data on the scale of the problem India faces:

1. 47% of Indian children under 5 suffer from malnutrition.
2. 60 million in all, highest in the world.
3. Two million Indian children under 5 die each year.
4. At least one million of them die from low immunity attributable to malnutrition.
5. Ten million children out of the statistical range a year suffer from lack of motor and cognitive skills for the rest of their lives.
6. Most of the retardation occurs between two to three years of age.

In 2008, Indian Planning Commission member Syeda Hameed acknowledged that India is worse than Bangladesh and Pakistan when it comes to nourishment and is showing little improvement.

Speaking at a conference on "Malnutrition an emergency: what it costs the nation", she said even Prime Minister Manmohan Singh during interactions with the Planning Commission has described malnourishment as the "blackest mark".

"I should not compare. But countries like Bangladesh, Pakistan and Sri Lanka are better," she said. The conference was organized last year by the Confederation of Indian Industry and the Ministry of Development of Northeastern Region.

According to India's Family Health Survey, almost 46 percent of children under the age of three are undernourished - an improvement of just one percent in the last seven years. This is only a shade better than Sub-Saharan Africa where about 35 percent of children are malnourished.

India has recently been described as a "nutritional weakling" by a British report.

Among the developing countries ranked by NGO Action Aid for Hunger, Brazil wins the top spot with B grade (no country gets an A on a scale from A to E), with the aid agency praising President Luiz Inacio Lula da Silva's support for land reform and community kitchens for the poor.

ActionAid said Brazil's success shows "what can be achieved when the state has both resources and political will to tackle hunger".

China (B grade) is also gets high marks for cutting the number of hungry by 58 million in 10 years through strong state support for smallholder farmers.


But the report is critical of resurgent India, which receives the lowest possible E (essentially an F) grade for hunger. It says 30 million Indians have been added to the ranks of the hungry since the mid-1990s and 46% of children are underweight. Pakistan, with grade D, is also ranked low, with 31% of its children underweight. Bangladesh, receiving C grade, is praised for reducing the number of chronically food-insecure people from 40 million to 27 million in the past 10 years and for improving childhood nutrition in the past two decades. But the report says Bangladesh has a long way to go to reduce overall malnutrition and build a sustainable agricultural system.

India's failure to follow through on the Supreme Court order of right to food has not deterred the Indian politicians from creating even more legislation granting new rights rather than ensuring implementation of the rights already created. It has introduced a right-to-information law and a vast new public-works program, known as NREGA, that guarantees all rural households 100 days of employment a year. Re-elected last year, the Congress Party government pushed through a law that seeks to guarantee free compulsory education to all children between the ages of six and 14. A bill to uphold Indians’ right to food could follow. It'll be a first in the region. As far as I know, no such legal rights to food exist in China or Pakistan.

However, as the Economist story puts it, the poor Indians "have recently grown rich in legal “rights”. In theory these guarantee them education, health, food and many other boons. What good, students of Indian poverty wonder, does this do them?"

Given the fact that India ranks at 171 out of 175 ranked on public health spending (less than 1% of GDP), the new rights are not likely to substantially change access to health care by the poor Indians. According to the Economist, "over 80% of health-care spending in India is in the private sector, for example, yet any “right-to-health” legislation is likely to focus on non-functioning public clinics".

No too long ago, Beijing's Tienanmen Square was the scene of the Chinese government crackdown by the units of the People's Liberation Army (PLA) against mass students protests in 1989. Since the death of Chairman Mao and passing of the leadership to late Deng Xiaoping in 1980s, the Chinese communist party has pursued liberalizing the nation's economy without political liberalization, in the same way other East Asians did earlier. Such a strategy has allowed them to pursue rapid industrialization with accelerated economic growth over the last two decades, while forcefully controlling the chaos on the streets, to lift a record number people out of poverty. China's large neighbor India has failed to use a period of high economic growth to lift tens of millions of people out of poverty, falling far short of China’s record in protecting its population from the ravages of chronic hunger, United Nations officials said recently. Last year, British Development Minister Alexander contrasted the rapid growth in China with India's economic success - highlighting government figures that showed the number of poor people had dropped in the one-party communist state by 70% since 1990 but had risen in the world's biggest democracy by 5%.

In many ways, the fundamental rights are better respected in China than the democracies in South Asia. Clearly, democracy in developing countries like India and Pakistan is highly overrated. Unlike the one party communist state in China, the much-hyped South Asian democracies have failed to deliver good governance and the basic necessities like food, clothing, shelter, sanitation, heathcare and education.

The oft-repeated rhetoric that "even the worst democracy is better than the best dictatorship" can not save democracy, particularly in Pakistan. If the current crop of elected politicians is really serious about strengthening democracy, it is important for its leadership to pursue a broad good governance agenda in Pakistan with education and training of politicians as the center piece. It is important for them to revive the idea of a school of government in Islamabad to increase the chances for democracy to survive and thrive in Pakistan. Unless the politicians find a way to improve governance to solve people's problems, the nation will be condemned to repeat the past history of democracy's failure in Pakistan.

Here's a video clip of campaign for right to food in India:



Related Links:

Indian Democracy Overrated

Theory and Practice of Right to Food

South Asia's War on Hunger Takes Back Seat

Food, Shelter and Clothing in India and Pakistan

Haq's Musings

India's Rights Approach

Grinding Poverty in Resurgent India

Why is Democracy Failing in Pakistan?

Right to Food in India Campaign

Sunday, March 21, 2010

Pakistan Signs Iran Gas Pipeline Deal

In clear defiance of the US campaign to isolate Iran, Pakistan this week formally signed an agreement for the construction of a 560-mile, $7.5 billion gas pipeline from Iran's South Pars gas field in the Gulf through Pakistan's Balochistan province to Sindh province. The agreement with Iran came within days of America's announcement of plans to push stricter sanctions against Iran, and just days before the start of the planned US-Pakistan strategic dialog in Washington.



"By connecting itself with the world's second largest gas reserves, Pakistan would guarantee reliable supply for decades to come," U.S. energy analyst Gal Luft told UPI.

Pakistan is not alone in snubbing the world's sole superpower. Just last week, the Israelis did the same when they announced plans to build 1600 new units in occupied East Jerusalem during Vice President Joseph Biden's visit there. Subsequent denunciations of Israeli actions by the Quartet (UN, Europe, Russia and US) and angry rhetoric in Washington has only served to strengthen the Jewish state's resolve to go ahead with the settlement construction on Palestinian land.

Turkey, Brazil and China have in the past month each delivered timely snubs of Washington's push for sanctions against the Iranian regime, according to a story in the Wall Street Journal. Russia joined the list of snubbers when it surprised the U.S. delegation this week by announcing that it plans to help Iran launch its first nuclear reactor by July just as Secretary of State Hillary Clinton wrapped up her Moscow visit.

Strangely enough, a country like India which prides itself on its independence in setting foreign policy, is out of tune with the rest of the world in its decision to pull out of the Iran-Pakistan-India gap pipeline project under intense US pressure. It seems India is quite satisfied with the access to US nuclear technology in exchange for obeying Washington on Iran.

The US has so far rejected any civilian nuclear deal with Pakistan. But there are some US analysts, like Christine Fair, who see the benefits of such a deal. Here is how Fair put it in a recent Wall Street Journal op ed:

"Pakistan terrifies the United States because it is a unique nexus of nuclear proliferation and Islamist militancy. But with success in Afghanistan elusive, Washington needs Islamabad more than ever, and vice versa. The two countries have never been able to achieve a durable relationship based on mutual trust. That could be fixed, however, if the U.S. were willing to consider a radical new approach: a policy centered on a conditions-based civilian nuclear deal.

Nuclear cooperation could deliver results where billions of dollars of American aid have failed. Pakistan has long benefited from Washington's largess—including more than $15 billion in aid and lucrative reimbursements since 9/11—while only marginally delivering on U.S. expectations. Islamabad has refused to work against the Afghan Taliban and homegrown terror groups like Lashkar-e-Taiba, or provide Washington access to A.Q. Khan to verify that his nuclear black markets have been dismantled."


Fair argues in her Op Ed that "In the long shadow of A.Q. Khan and continued uncertainty about the status of his networks, it is easy to forget that Pakistan has established a Strategic Plans Division that has done much to improve safety of the country's nuclear assets."



The United States no longer enjoys the kind of unchallenged superpower status it did immediately after the collapse of the Soviet Union. In spite of the fact that the US economy is still the world's largest accounting for 27% of global GDP, and its military is the most powerful with the ability to project American power around the globe, there are increasing challenges to its authority by many nations. In fact, the current US situation is best explained by its parallels to that faced by the Vito Corleone character in the classic movie "The Godfather", as described by "The Godfather Doctrine", a foreign policy parable by John Hulsman and Wes Mitchell. It appears that the US has lost its perceived power to make offers that no one can refuse.

It seems that the elaborate framework of international institutions that US helped architect and build after WW II, such as UN Security Council, NATO, World Bank, OECD, WTO, IMF, and IAEA, through which America exercises tremendous power and control, are being weakened partly due to America's own missteps, and my guess is that these alliances and institutions will not survive beyond the next few decades. There will be a huge realignment of nations, as the powerful new players, including China, Russia, Germany, Japan, Brazil, India, South Africa will demand greater say in the affairs of the world. So will the Iranians, the Koreans, the Turks, the Pakistanis and the Arabs. With their growing economic power, the Chinese are already starting to take steps to replace the US dollar with the Chinese yuan as a major reserve and trade currency in the world.

The US-India nuclear deal, and India's decision to abandon the IPI gas pipeline, and the growing India-US ties appear to be part of a larger realignment in Asia and the world. There is an effort by the US to "co-opt" India as a close ally in the emerging new world order.

Related Links:

US-India Military Ties

Can Chinese Yuan Replace US Dollar as Reserve Currency

Vito Corleone: A Metaphor For Uncle Sam?

US-India Nuclear Deal

Pakistan's Energy Crisis

Pax Corleone

The Godfather movie

Manmohan Singh Professes Love of America

Wednesday, March 17, 2010

Chinese Yuan as Reserve and Trade Currency?

A series of Chinese government policy changes are enabling Asian companies to settle trades with their Chinese counterparts in renminbi, according to Risk.net website. And increased intra-Asian trading volume may lead Beijing to also consider allowing other trade-related insurance and derivatives denominated in renminbi to be done offshore, according to bankers and regulators in Hong Kong.

Although it is still very early, the Chinese move aims for its currency to join the US dollar and EU's Euro as a major trade and reserve currency. A key hurdle that the Chinese need to cross is the full convertibility of the yuan into other major currencies. Beijing is beginning to get around the convertibility issues by signing currency swap agreements with several of its trading partners, including Argentina, Indonesia, India, Japan, Pakistan, Russia and South Korea. The agreement requires that the central banks of the partner countries have adequate deposits of each others’ currencies. These countries will eventually be able to use the Chinese currency for deals between each other.

It has long been recognized that the US dominance in global affairs is at least partly attributable to the US dollar as the world's biggest reserve and trading currency. Nearly two-thirds of the world's central-bank reserves are denominated in US dollars, according to data from the International Monetary Fund. The euro accounts for about a quarter -- up from 18% when it was introduced in 1999, but less than its predecessor currencies' share in 1995. Because the U.S. is such a huge trading partner for so many countries, the reserve buildup isn't easily unwound.



According to the Wall Street Journal, the dollar is also deeply entrenched in world trade. Businesses lower their transaction costs by dealing in a common currency. More than 80% of exports from Indonesia, Thailand and Pakistan are invoiced in dollars, for instance, according to the latest figures available in research by the European Central Bank, although less than a quarter of their exports go to the U.S.

Taking a page from the history of US rise in the last century, the Chinese efforts on currency appear to be only the first part of its larger push to assert its status as a new superpower of the twenty-first century. In a piece interestingly titled "It’s China’s World. We’re Just Living in It" in the latest issue of Newsweek, the authors argue that the Chinese are looking to reshape the world with China at its center. The larger plan includes the creation of a new framework with a new set of international institutions through which the Chinese can exercise their power.

While many nations want to change at least part of their reserve holdings from US dollars to euros or other alternatives, they know if they sell a significant share of their dollar reserves, it would weaken the dollar's value. That would potentially hurt their own trade competitiveness, and push down the value of their remaining dollar reserves. If they keep the dollars, a buildup of unwanted assets would only mount.

Beijing holds $2 trillion in dollar assets, accumulated through years of exports to America and massive purchases of Treasuries by the Chinese government, according to Businessweek. One way they can reduce their exposure to dollar assets over time is to shift their reserves from long-term Treasuries into shorter-term U.S. bonds. That shift would give the Chinese more flexibility in easing away from the dollar. The New York Times reported recently that the Chinese seem to be maintaining dollar-asset ownership levels, but shifting their holdings into maturities of a year or less—something they have not previously done.

"There is no alternative to the dollar as a trading currency in Asia," Andy Xie, a Hong Kong-based economist told the Wall Street Journal last year. "Eventually, the renminbi [yuan] will replace the dollar in Asia, perhaps in our lifetime. But it will take at least 30 to 40 years."

Here's a similar opinion issued recently by Moody's Investor Service on the status of US dollar as global reserve currency:

Recent speculation about the future of the dollar as the world's reserve currency is, in Moody's view, unfounded. Despite the US's external deficits and dollar depreciation, we believe that the likelihood of the dollar losing its prominent role as a reserve currency remains very low for at least the next three to five years: Regardless of the current state of US public finances, the economic and political factors underpinning the dollar's reserve currency status are still aligned in favour of the dollar and are likely to remain so for some time. There are no plausible alternative currencies that are ready to take the US dollar's place as the global reserve currency. We do not consider the Chinese renminbi and the IMF's Special Drawing Right (SDR) to be credible alternatives. Inertia and the interconnectedness of financial markets, not to mention the size of the global market for dollar-denominated debt, highlight the difficulties of a global switch from the dollar to another currency...



As China begins to surpass America as a major trading partner of many of the largest economies, it has growing economic clout in the world. But the key question is: Can the Chinese come up with their version of Bretton Woods—a system of political and economic public goods that have benefited not only the United States, but the key US allies as well? Only time will tell.

When the 20th century began, the U.S. was already the world's biggest economy, but the British pound still accounted for nearly two-thirds of official foreign-exchange reserves held by the world's central banks. The dollar didn't become the dominant currency until after World War II. Even then, some commodities still traded in pounds: The London sugar market didn't jettison sterling for a dollar-denominated trading contract until around 1980. The history lesson here is that, while the reserve and trade currencies can and do change, it takes a significant re-architecture of the world economy and trade and significant amount of time for it to happen.

The signing of currency swap agreements with several of its trading partners, including Argentina, Indonesia, India, Japan, Pakistan, Russia and South Korea, is a good start for China. But it will take many decades for yuan to displace US dollar after China becomes the world's largest economy around 2040.

Here's a video clip of NYU's Professor Nouriel Rubini's prediction on yuan:



Related Links:

China's Checkbook Power

Godfather's Vito Corleone: A Metaphor For Uncle Sam?

The Future of US Dollar as Reserve Currency

Bretton Woods

China's Growing Role in Afghanistan and Kashmir

China Sees Opportunities Where Others See Risk

Chinese Do Good and Do Well in Developing World

Can Chimerica Rescue the World Economy?

Monday, March 15, 2010

Creative Solutions For Child Malnutrition in South Asia

Although it's a subject I have often written about, this particular post about fighting child malnutrition is inspired by a recent email from Col. Pavan Nair, an Army officer turned social activist, and a patriotic Indian with a deep sense of service to those in the greatest need in his country and its neighborhood.



In 2009, the Indian government banned the import of Plumpy'Nut nutrient bar by UNICEF to treat moderate to severe acute malnutrition among Indian children. Defending the government action, Mr. Shreeranjan, the joint secretary of the Ministry of Women and Child Development, told the Reuters that "Nothing should come behind our back. Nothing should be done in the name of emergency when we have not declared an emergency."



Clearly, Mr. Sheeranjan does not see the food emergency that is causing almost half of India's children to be malnourished. According to UNICEF's State of the World's Children's report carried by the BBC, India has the worst indicators of child malnutrition in South Asia: 48% of under fives in India are stunted, compared to 43% in Bangladesh and 37% in Pakistan.

Meanwhile 30% of babies in India are born underweight, compared to 22% in Bangladesh and 19% in Pakistan. UNICEF calculates that 40% of all underweight babies in the world are Indian.

Malnutrition is the leading cause of death in children in developing countries, including India and Pakistan. According to World Health Organization about 60% of all deaths, occurring among children aged less than five years in developing countries, could be attributed to malnutrition.

Those who survive the trauma of early childhood malnutrition suffer various degrees of brain damage and continue to lack sufficient cognitive and motor skills later in life.

According to World Bank's HNP (Health and Nutrition) paper "India's Undernourished Children", here is some data on the scale of the problem India faces:

1. 47% of Indian children under 5 suffer from malnutrition.
2. 60 million in all, highest in the world.
3. Two million Indian children under 5 die each year.
4. At least one million of them die from low immunity attributable to malnutrition.
5. Ten million children out of the statistical range a year suffer from lack of motor and cognitive skills for the rest of their lives.
6. Most of the retardation occurs between two to three years of age.

In the face of such shocking data, what is particularly disturbing is the lack of focus in pursuing solutions to this problem that affects tens of millions of children in the developing world, especially in sub-Saharan Africa and South Asia.

If the governments, such as India, are concerned about dependence on foreign food imports, they need to have policies and plans in place to encourage development of local alternatives to what are called ready to use therapeutic food (RUTF) bars such as Plumpy'Nut made from fortified peanut paste.

Community-based therapeutic care is being pushed in Pakistan by an Agha Khan University project. It is an attempt to maximize broad impact through improved coverage, access, and cost-effectiveness of treatment for malnutrition. Such community-based nutrition packages can provide effective care to the majority of acutely malnourished children as outpatients, using techniques of community mobilization to engage the affected population and maximize coverage and compliance. Children with SAM without medical complications are treated in an outpatient therapeutic program with ready-to-use therapeutic food and routine medications. It proposes the use of Ready-to-use Therapeutic Food (RUTF) and Fortified Supplementary food for the treatment of moderate and severe malnutrition. The advantage of these commodities is that they are ready-to-use paste which does not need to be mixed with water, thereby avoiding the risk of bacterial proliferation in case of accidental contamination.

While the advantages of the RUTF solutions such as Plumpy'Nut and Cipla's generic equivalent Nutrinut are proven, the cost of such treatment needs to be made a lot more affordable than it is. A standard Plumpy'nut treatment goes for four weeks (twice a day) at a cost of 12 Euros in Africa. India's Cipla also makes a generic version of Plumpy'Nut. It's being used in Nepal for Nepali Rupees 52 (~75 US cents) for a 500 Kcal bar. At 92 grams net weight; 12.5 grams protein; 32.86 grams lipid). It has the same nutritional content of F-100 milk formula and plumpy’Nut.



On the extreme affordability front, Bangladesh is setting an example for others to follow. Bangladeshi Nobel Laureate Mohammad Younus's Grameen, in joint venture with Danone of France, is producing a special yogurt called Shakti Doi from pure full cream milk that contains protein, vitamins, iron, calcium, zinc and other micronutrients to fulfill the nutritional requirements of children of Bangladesh and contribute in improving their health. While 'Shakti Doi' (which means 'power yogurt') is primarily intended for children, it is also appropriate for adults. The price of each 80 gram cup of yogurt is only 5 takas, equivalent to Euro 0.05 (five cents). It is an affordable price even for the poor people of Bangladesh. It's locally made and significantly cheaper than Plumpy'Nut, costing about one-tenth of the cost of solutions offered outside Bangladesh.

In his email to me, Col. Nair has proposed a solution for India with the target cost of one Indian rupee or less. His solution seeks to address protein energy malnutrition (PEM), iron deficiency anemia (IDA), and vitamin A deficiency (VAD) found among Indian children. Nair's idea is to develop a nutrient bar consisting of locally produced oats mixed with honey and crushed peanuts weighing about 15-20 grams, and fortified with iron (50%), vitamin A (75%), vitamin B6 and B12 (25% each), vitamin C (50%), vitamin E (50%), Iodine (50%), zinc (50%), and other nutrients like biotin, folic acid, calcium, sodium and potassium.

I am not a nutritionist. However, I do think Col. Nair's proposal to develop a low-cost solution to address the massive problem of child malnutrition in India and Pakistan deserves a serious look and concrete follow-up. It's an opportunity for social entrepreneurs and the corporate sector to jump in with their creative energies and dollars to meet the challenge thrown by Col. Nair. Meeting this common challenge as joint India-Pakistan effort will ensure a better future for all south Asians, and bigger future profits from a brainy, healthy and highly productive next generation of Indians and Pakistanis.

Related Links:

Persistent Hunger and Malnutrition in South Asia

Social Entrepreneurs Target India and Pakistan

Light a Candle, Don't Curse Darkness

Grinding Poverty in Resurgent India

India Tops World Hunger Chart

Food, Clothing and Shelter in India and Pakistan

Mixed Messages in Hunger Report

ActionAid's World Hunger Score Card

World Food Program in India

World Food Program Pakistan

Friday, March 12, 2010

Newsweek Eyes Pakistan Media Market

With the planned September launch of its Pakistan edition, Newsweek magazine is the latest publication to join Pakistan's media revolution, according to MediaBistro.com. Newsweek Pakistan will be the first licensed international news magazine for the country and the eighth local edition under the Washington Post Co.-owned Newsweek brand. Other country editions published by Newsweek include those in Japan, Korea, Kuwait, Mexico, Poland, Russia and Turkey. In addition to featuring more local content, the country editions target local and international advertisers with special pricing to be competitive in the targeted media markets.

Newsweek Pakistan Edition

Newsweek Pakistan will be published under license by AG Publications, a privately-owned media company in Pakistan. Fasih Ahmed, who has reported for The Wall Street Journal and Newsweek International, will be the editor of Newsweek Pakistan. Ahmed won a New York Press Club award in 2008 for Newsweek's coverage of the assassination of former Pakistani Prime Minister Benazir Bhutto. Initially, there will be 30,000 copies of Pakistan edition printed each week.

Pakistan's Media Boom

The current media revolution sweeping the nation began ten years ago when Pakistan had just one television channel, according to the UK's Prospect Magazine. Today it has over 100. Together they have begun to open up a country long shrouded by political, moral and religious censorship—taking on the government, breaking social taboos and, most recently, pushing a new national consensus against the Taliban. The birth of privately owned commercial media has been enabled by the Musharraf-era deregulation, and funded by the tremendous growth in revenue from advertising targeted at the burgeoning urban middle class consumers. Analysts at Standard Charter Bank estimated in 2007 that Pakistan had 30 million people with incomes exceeding $10,000 a year. With television presence in over 16 million households accounting for 68% of the population in 2009, the electronic media have also helped inform and empower many rural Pakistanis, including women.



With an increase of 38% over 2008, the television advertising revenue for 2009 in Pakistan was Rs 16.4 billion ((US $200m), accounting for about half of the total ad market during the year. The TV ad revenue is continuing to rise as a percentage of total ad revenue, mostly at the expense of the print media ads. The biggest spenders in 2009 were the telecom companies with Rs 8 billion, followed closely by fast moving consumer goods (FMCG) sector with Rs. 7 billion, as reported by Pakistan's GeoTV channel. FMCG products, as opposed to consumer durables such as home appliances, are generally low cost and replaced or fully used up over a short period of days, weeks, or months, and within one year. Other important sectors contributing to ad revenue are financial services and real estate, but these sectors have experienced significant slowdown with the current economic slump.

According to Daily Times, Chairman Mushtaq Malik of the Pakistan Electronic Media Regulatory Authority (PEMRA) has said that the cable television sector “is the fast growing segment among the electronic media ventures”. In the first 100 days of the current government, he has claimed that new licenses for 16 satellite TV channels, 10 FM radio stations, and 232 cable TV channels have been granted. It is anticipated that this would lead to additional investment worth Rs. 2.5 billion, generating 4000 additional jobs in this sector. The cable television sector alone is employing some 30,000 people in the country.

Foreign media, such as the business channel CNBC Pakistan, have also found a niche with the stellar performance and increased viewer and investor interest in Karachi stock exchange in the last decade. The Gallup Pakistan estimates that the number of TV viewers age 10 and above has increased from 63 million in 2004 to 86 million in 2009. Though exact numbers are hard to find, it is estimated that the rapid growth of Pakistan's media market over the last decade has attracted significant investment in the range of billions of dollars, and produced hundreds of millions of dollars in revenue. There are 150 advertising agencies and 74 production companies. Given the rising power of the media to shape Pakistani society, public opinion and government policy, it is important to have greater transparency on sources of investments and revenue in the media business.



FM Stations

More than 100 private FM radio stations have been licensed in the last ten years. Most of them are known for providing basic entertainment - easy listening, popular music, cooking recipes, etc. But some FM stations are also providing useful information through talk shows by experts on legal, psychological and health matters; a community radio station in Lakki Marwat near FATA has a show on modern farming techniques like drip irrigation. In Karachi, at a discussion on organ transplant and organ donation, a caller who identified herself as a doctor, pointed out that those who denounce the practice as un-Islamic forget that technically even blood is defined as an organ.

On a national level, television is the dominant communication medium in Pakistan. But radio listenership in Pakistan remains strong in certain areas of the country. This is particularly the case in rural areas and less economically developed provinces, according to audiencescapes.org.



Specifically, in the rural areas of the Baluchistan province, 46 percent of respondents said they listen to the radio at least weekly, rivaling rural television viewership at 47 percent. While in rural areas of the other three provinces surveyed (the Northwest Frontier Province (NWFP), Punjab, and Sind), radio listenership is strong but is still lower than TV viewership.

In regions such as the Federally Administered Tribal Areas (FATA, not surveyed), where the Taliban has held control over certain areas for a significant period of time, radio transmissions are often people’s main source of entertainment and news, mainly because religious extremists disrupt television broadcasts through frequent sabotage. Mainstream newspapers are also not available; many villages are difficult to access and selling publications can be risky for the seller. In addition, within the FATA region and much of the NWFP, television sets are simply too expensive and access to electricity is spotty.

Print Media

Although broadcast and cable media are the primary sources of information for most Pakistanis, the press has a long history in the country and a contentious relationship with successive governments. The All Pakistan Newspapers Society (APNS) boasts more than 262 member publications in print,. Overall estimates indicate that there are about 1,000 daily newspapers, most of which are in English or Urdu. A BBC survey in 2008 found that 42% of men and only 13% of women read newspapers regularly. Pakistan's press is among the most outspoken in South Asia, although its influence is limited by a literacy level of only 56%.



Internet

World telecoms body the ITU estimated in March 2008 that there were 17.5 million internet users, and the Internet access is continuing to grow rapidly. In addition to the established print, radio and television media websites, the Internet is also providing a platform for activists and emerging journalists to express their views through myriad online publications, blogs and social networking sites. With over 56% penetration of mobile phones in Pakistan, the widespread availability and affordability of modern communication technology has helped generate tremendous interest in the use of voice calls, photo or video uploading and text messaging to share news, opinions and ideas broadly.

Pakistan has a population of over 170 million and daily sales of only about 100,000 copies of English-language publications. The English language print media is dominated by local newspapers and magazines published by Dawn, Jang and Nawai Waqt media empires. The entry of Newsweek's Pakistan edition in the market will offer both local and international content, and is expected to start off with a print run of 30,000 copies, according to the Financial Times.

Book Publishing

The media boom in Pakistan has also brought attention to a new crop of Pakistani authors writing in English. Names such as Mohsin Hamid (The Reluctant Fundamentalist), Daniyal Mueenuddin (In Other Rooms, Other Wonders), Kamila Shamsie (Burnt Shadows), Mohammad Hanif (A Case of Exploding Mangoes) and Nadeem Aslam (The Wasted Vigil) have been making waves in literary circles and winning prizes in London and New York, according to the Guardian newspaper.

Summary

I personally experienced the pervasive effects of Pakistan's media boom last summer when I visited the country. I saw multiple, competing channels catering to almost every niche, whim and taste---from news, politics, education, health, sports, comedy and talk shows to channels dedicated to cooking, fashion, fitness, music, business, religion, local languages and cultures etc. The media have had a profound influence on how many young people learn, talk, dress and behave, and emulate the outspoken media personalities, various experts, actors, preachers, singers, sportsmen, celebrities and fashion models. The growth in Pakistan's media market has resulted in more useful information, more advertising, more competition and more choice for the public.

Pakistan finds itself in the midst of many crises, ranging from a deep sense of insecurity and economic stagnation to low levels of human development and insufficient access to basic necessities of life such as proper nutrition, education and health care. My hope is that the mass media will effectively play a responsible role to inform and educate Pakistanis on the fundamental issues of poor governance in Pakistan, and help in shaping the debate and policies to solve some of the most serious problems facing the nation today.

Related Links:

Haq's Musings

Why is Democracy Failing in Pakistan?

Poor Governance in Pakistan

Musharraf's Economic Legacy

The Real News From Pakistan

Pakistan's Economic Stagnation

Karachi Tops Mumbai in Stock Performance

Newsweek Pakistan Edition Launch

Brief History of Media in Pakistan

The Power of TV: Cable TV and Women's Status in India

Eleven Days in Karachi

Pakistan Country Profile By BBC

Online Political Activism in Pakistan

Pakistan Media Cyberletter

Asian Television Advertising Coalition

Impact of Cable TV on Pakistani Women

Wednesday, March 10, 2010

100 Million Missing Girls of India and China

The last century saw the largest total population increase ever in the history of the world. At the start of the twentieth century, there were 1.6 billion people, according to Gaia Watch. At the end there were 6.1 billion people. However, the total fertility rates in the world are now rapidly declining; it is happening in America, Asia, Europe and the Middle East. With increasing urbanization and rapid economic growth, there are tremendous pressures being felt to reduce the family size in the emerging economies of the world. And it's a trend often missed by the casual consumer of frequent sensational media stories warning us about "the population bomb". Dramatic increase in female Genocide or gendercide—the title of a 1985 book by Mary Anne Warren—is seen as an unintended consequence of pressure to have smaller families in countries like India and China.



As we are constantly bombarded by such stories and arguments about the the dangers of increasing world population, let's consider the following: Is it necessarily a good thing that the fertility rates are reaching sub-replacement levels of less than 2.2 in many nations of the developing and the developed world? Why are the disappearing daughters in India and China bearing the brunt of this decline? How will this heavily skewed male-female ratio impact social stability and economics in the largest Asian nations? What will be the impact of declining fertility rates on the welfare states in Europe? How will different nations cope with the consequences of fewer workers and aging populations? Who will pay the taxes to cover the escalating costs of caring for the elderly? Will the elderly be required to work well beyond the prevailing retirement age? Or will it be the new immigrants who will join the work force to pay to sustain the welfare states in Western Europe? Before answering these questions, let us look at what is happening to the world population today.

Fertility rates are declining, and the baby girls are paying the heaviest price in the rapidly unfolding tragedy of female genocide. This is particularly true for the most populous Asian nations of India and China, with the pressure to have small families combined with the ancient preference for male children. Add to that the widespread availability and affordability of ultrasound scan technology used to determine fetus gender, and you see all of the ingredients of a "gendercide" that, according to the Economist magazine, is responsible for 100 million missing baby girls in the world today.

Here's how the Economist magazine puts the issue of "gendercide" in its recent issue: "For millions of couples, the answer is: abort the daughter, try for a son. In China and northern India more than 120 boys are being born for every 100 girls. Nature dictates that slightly more males are born than females to offset boys’ greater susceptibility to infant disease. But nothing on this scale". It is estimated that at least 50 million Indian girls have been aborted in recent years, partly contributing to the decline in India's fertility rate from 3.11 to 2.81 children per woman in the last decade. China's TFR has actually increase slightly from 1.70 to 1.73 during the same period. To put it in perspective, the world average TFR declined from 2.65 to 2.55 children per woman from 2000 to 2009.



Among the consequences of more boys than girls in society, the Economist story on gendercide points out rising social instability in parts of the developing world. It explains, "Throughout human history, young men have been responsible for the vast preponderance of crime and violence—especially single men in countries where status and social acceptance depend on being married and having children, as it does in China and India. A rising population of frustrated single men spells trouble."

The list of countries and territories where the total fertility rate has dropped below sub-replacement level is long, and it extends beyond Europe and Asia into the conservative Islamic nations of North Africa and the Middle East. Of the 195 countries and territories listed on the UN TFR ranking, 85 have fertility rates of less than 2.2, considered an acceptable replacement level. Indonesia, the largest Muslim nation by population, has sub-replacement fertility level of 2.18, and it is declining. Turkey is at 2.14; Tunisia is at 1.93; Iran is at 2.04, slightly lower than the US's 2.05.

With increasing urbanization, Pakistan's population growth rate has declined from 2.17% in 2000 to 1.9% in 2008. Based on PAI Research Commentary by Karen Hardee and Elizabeth Leahy, the total fertility rate (TFR) in Pakistan is still the highest in South Asia at 4.0 children per woman. Women in urban areas have an average of 3.3 children compared to their rural counterparts, who have an average of 4.5 children. The overall fertility rate has been cut in half from about 8 children per woman in 1960s to about 4 in the last decade, according to a study published in 2009.

In a book titled "The Empty Cradle", the author Phillip Longman warns that the declining birth rates around the world will cause many social and economic problems. As a consequence of declining fertility, by 2050 the population of Europe will have fallen to what it was in 1950. Longman says this is happening all around the world: Women are having fewer children. It's happening in Brazil, it's happening in China, India and Japan. It's even happening in the Middle East. Wherever there is rapid urbanization, education for women and visions of urban affluence, birthrates are falling, disproportionately cutting female births in some of the most populous nations such as India and China. Having and raising children is seen as an expense and a burden.

"So we have a "free rider" problem. You don't need to have children to provide for your old age -- but the pension systems need them." Says Longman, referring to the coming Social Security crunch as the number of retired people rises faster than the number of workers.

In addition to outsourcing in Asia, America is relying increasingly on immigration from the developing world to fill its jobs, according to report in Daily Mail. The nation is reaching a "tipping point" when the babies born to minority parents outnumber whites for the first time. More white women than ever before are postponing having children until they are older, while minority mothers are still having babies at younger ages, according to a US study published recently.

Europeans are also starting to face the problems stemming from their declining birth rates and aging populations on the solvency of their pension systems, and the need to increase immigration from the developing world to fill the jobs in their domestic economies. Some of the European corporations are choosing to move jobs to developing nations, which cuts their costs but also reduces government revenue. Both of these options are causing backlash against immigrants, and fueling protectionist policies against trading partners.

Looking to the future, it is quite easy to see the rapidly declining worldwide birth rates, and it is important to recognize the impact of this trend on national economies, global trade, immigration policies, social structures, and politics around the world. Instead of continuing to harp on the potential adverse effects of the "population bomb", the mass media need to balance the conversation by highlighting the negative effects of the ongoing baby bust.

Here's a video clip about the wanton destruction and dumping of female fetuses in India:




Related Link:

Do Urban Slums Offer Hope?

Pakistan Most Urbanized in South Asia

Sub-replacement Fertility Rates

Female Genocide Unfolding in India

Missing: 50 Million Indian Girls

Population Growth and Migration

The Empty Cradle By Phillip Longman

Demographics Trend Favor Muslims in the West?

Friday, March 5, 2010

Privatizing Police in Pakistan?

The last few years in Pakistan have seen significant proliferation of privatization of traditional state functions. There are a growing number of private security companies providing armed guards, private toll roads, private education at all levels, private hospitals and clinics, private water delivery businesses, and private clubs. Instead of helping improve the situation for all of their fellow citizens, it seems that the Pakistani elite are retreating into their own shells to isolate themselves from the terrible effects of deteriorating governance in their land.

Privatization wave is not limited to Pakistan alone. Prompted by growing security concerns and faced with huge budget deficits, the United States is seeing increasing privatization of security functions, often referred to as "dual law enforcement". Gated communities patrolled by private security guards are popping up all over the United States. Privately operated prisons are also growing, along with private police forces in America.

The US wars in Afghanistan and Iraq have seen new highs in levels of privatization in intelligence and combat support roles. The number of US contractors working for the US military and the CIA in the Afghanistan and Pakistan region exceeds the total strength of the US troops and CIA personnel, according to estimates by Jimmy Scahill who has researched and written extensively about Blackwater (aka Xe Services). The presence of over 80,000 US military and intelligence contractors in Afghanistan and Pakistan makes the level of privatization of war unprecedented. US is reportedly employing private security contractors provided by the American private military company (PMC) Dyncorp to carry out intelligence and security operations in Pakistan.

Pakistan's neighbor India, too, has hired, armed and trained private militias like Salwa Judum in its war against the Maoists in Chhattisgarh and other Indian states. There have been allegations in the past two years of rape, murder and extortion by Judum and other such private armies backed by the state.

Sweden based security firm Securitas is emerging as one of the largest private security contractors in the world. Securitas has acquired companies to become a player in many countries from the Czech Republic to Mexico and Morocco.

Another private global security company G4S Wackenhut has presence in Pakistan, with its headquarters located in Karachi. It provides services such as armed guards, cash services, security systems, facility management, research & collection services, canine services, consultancy & risk management, to its Pakistani clients.

“These recent acquisitions (by private security corporations) reflect opportunities created by the current economic crisis. Global security providers like Securitas aspire to continual global growth and expansion, and their biggest profit margins are generally in emerging markets. As profits come under pressure in the more mature markets of Europe and North America, a global acquisition strategy becomes even more important,” Professor Rita Abrahamsen and Professor Michael C Williams of the Graduate School of Public and International Affairs at the University of Ottawa, told ISN Security Watch.

Local government services are being cut in many areas in the United States. California city of Tracy has decided to charge residents for responding to emergency calls. Residents can pay a $48 voluntary fee for the year which allows them to call 9-1-1 as many times as necessary. Or, there's the option of not signing up for the annual fee. Instead, they will be charged $300 if they make a call for help.

At a recent debate organized by Intelligence Squared, the attendees voted in the affirmative for the motion that "California is the First Failed State", because of its inability to provide basic services to its residents, like those in Tracy, California.

Here's a tongue-in-cheek guest post by freelance writer Syed F. Hussaini. It pushes the envelope by proposing privatization of police functions for improving the deteriorating law and order situation in Pakistan:

Pakistanis were heartbroken to see The National Geographic casually listing their country as a failed state in its September, 2009, issue.

There is no calibrated scale to measure how bad is the breakdown of law and order in Pakistan. One convenient barometer can be the personal experience. How many people an ordinary Joe knows who had been a victim of a recent crime? This simple, first hand approach would tell us that the gravity of the problem has reached a level where almost every single individual has a recent story to tell of how he himself or, a family member or friend, became a victim of a crime. It was not so in the 1970s. Back then, incidents of pickpocketing aside, a common man had to search his mind hard to think of somebody he personally knew as a crime victim.

The inability of the state to maintain law and order created a market which has since been growing steadily. Private security companies provide armed guards at the homes of the rich who now travel in convoys of sport utility vehicles loaded with gunmen. Private citizens are dispensing ready justice on the streets of big Pakistani towns burning robbery suspects alive. And, security service providers appear to be working hard to catch up with the enormous needs of this vast market of 173 million consumers.

It is not the first time the private sector is seen marching into the domain of the state and bringing in some positive change. Once upon a time, you needed good connections to get a telephone connection in Pakistan. Or, you had to pay tens of thousands of rupees as bribe to the government officials at the telephone department to have a phone line brought to your home or office.

Things changed. The winds of privatization blew away the monopoly of the telephone department and the advent of the cell phone sent armies of sales personnel chasing the consumers. Overnight, the culture of bribes disappeared from the telephone industry; at least, at the consumer end. Pakistanis would love to see a similar change in the law and order business.



If a guy goes to a police station in Pakistan to report that his car had been stolen, he has to pay thousands of rupees as bribe to have his complaint registered in the precinct records. He is robbed twice, unless he has connections.

Newspapers report robberies committed by police officers. Legend goes that the top police officials auction off the precincts to subordinate officers. The highest bidder is appointed the station house officer as the auction proceeds precinct by precinct.

Gangs run gambling, narcotics, alcohol, prostitution and other illicit businesses and pay the police off to look the other way. The police make additional money by extorting side-walk vendors, transport operators or the law-abiding motorists.

Then, there are the walk-ins seeking justice. They come in to report they had been robbed at gunpoint out on the street or at home, of their wallets, cell phones, motorcycles, automobiles or other possessions. At the precinct, everybody has to pay to have a report registered. That is good, sound, multi-billion-rupee business.

This huge revenue would be the greatest incentive for the private sector to jump into the arena of law-enforcement. Privately-owned companies can set up offices right next to the police stations and start registering First Investigation Reports (F.I.R.) for a fee. Competition between these companies would guarantee fair prices for this service.

Armed with proper government licenses, permits and authority and escorted by lawyers, these private companies can take these reports to the police precinct and have them entered into the government records.

The extortionist police officers at the precinct would lose their leverage over the lone, helpless, scared and stressed out crime victim trying to file an F.I.R. He would never set foot in their den. The police officers would think twice before they mess with the representatives of a licensed, multi-billion-rupee law-enforcement company with its corporate offices adjacent to the interior ministry in Islamabad and at the four provincial capitals.

These private companies in Pakistan can bring some law and order back to the streets of rough neighborhoods by arrays of surveillance cameras and patrols paid for by the crime-weary residents and businesses.

Such companies can set up competent crime scene investigation units and modern forensic and DNA testing labs. Their possible clients would be the families of missing or kidnapped persons and the insurance companies trying to recover stolen property, like automobiles, insured by them.

Pakistan's political leaders are mostly feudal lords or tribal chiefs. It is almost a master-slave relationship between the elected politician and the common man. A government job in Pakistan is a license to steal and extort. It is a parasite-host relationship between a government official and the common man.

However, the relationship between the industrial-business class and the common man in Pakistan is essentially a retailer-consumer one; in essence, an interactive business relationship. It is not an oppressively lopsided master-slave or parasite-host relationship. That is a great qualitative difference, a beacon of hope and solid ground to start working together for a change in the country to bring back the rule of law for mutual benefit.

Another common factor between the industrial-business class and the common man is the fear of being kidnapped for ransom. As the poor common man walks down the street looking over his shoulder, the poor rich man is firmly denied the simple pleasure of a stroll around his own mansion. The rich generate more ransom revenue, run more risk of being kidnapped and live in more fear. They, too, would like to leave their palaces by themselves any hour of day or night without any armed escort and just walk up to the roadside restaurant next block for an ice-cream or, a cup of tea, the way they did back in the 1970s.

True administration of justice, the firmest pillar of good government, is a related issue. Pakistani courts are overwhelmed with a backlog of unresolved cases. There are instances where the complainant and the respondent both have long been dead, killing the case itself. The courts do not know this because they do not have the resources to sift through their backlog for dead cases. There are cases where two parties are just looking for mediation, a fair adjudication, a lawful compromise. Buried in the backlog, the courts are unable to provide even this simple judicial service.

However, government-licensed private courts can provide these simple but essential judicial services swiftly. It would drastically reduce the backlog at the state courts. With their performance and quality of adjudication, these private courts may prompt the state courts to improve their own image.

Over decades, private companies moved into education, water supply and health care as the state failed to perform in these sectors. Now is the time for Pakistani tycoons to move into the business of maintaining law and order and administration of justice.

Free enterprise and competition compel the cell phone companies in Pakistan to offer the best price and the best service to their poorest consumers.

The market forces would compel the private sector to guarantee true administration of justice in Pakistan.


Related Links:

Crises Worsen Class Divide in Pakistan

Are India and Pakistan Failed States?

Eleven Days in Karachi

Armed and Dangerous: Private Police on the March

Pakistan Telecom Boom

US-induced Privatization of Security in Pakistan

Jinnah's Pakistan Booms Amidst Doom and Gloom

Incompetence Worse Than Corruption

Creative Financing of Pakistan's Energy Projects

Pakistan's Energy Crisis

Light Candles, Do Not Curse Darkness

Taliban Exploiting Class Rifts in Pakistan

Water Scarcity in Pakistan

Salman Ahmed Rocks Silicon Valley

Life Goes On in Pakistan

Pakistan's Higher Education Reform

Wednesday, March 3, 2010

Pakistan's Economy: What Went Wrong 2008-2010?

Guest Post By Prof. Ashfaque Hasan Khan

This post briefly reviews two years of economic performance of the present government. What it inherited, what it informed the IMF and the people of Pakistan, why it went to the IMF, and where we stand now - are the subject matter of this article.



Pakistan positioned itself as one of the four fastest growing economies in the Asian region during 2000-07 with its growth averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program.

These facts were acknowledged by the present government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008. The document clearly (but grudgingly) acknowledged that "Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07". It further acknowledged that "the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)

Per Capita PPP GDP


A cursory look at the above stated acknowledgment is sufficient to see that the government deliberately misguided the people of Pakistan by presenting a totally distorted picture of the economy. While it could misguide the people of Pakistan for domestic political consumption, it had no option but to tell the truth to the international financial institutions as these facts were known to them.



Even the government did not inform the people of Pakistan that it obtained the IMF Program on the basis of past performance. Pakistan received the extra-ordinary funding from the IMF under the fast-track Emergency Financing Mechanism which was meant for the countries "that have a strong track record of sound policies, access to capital markets and sustainable debt burdens but need rapid help to overcome financial crisis". (IMF Survey, October 29, 2008) Thus, a government which starts its inning on distortion can never bring stability in the economy. Most of its time and energy would be consumed for covering up of its failure.



The present government inherited a relatively sound economy on March 31, 2008. It inherited foreign exchange reserves of $13.3 billion, exchange rate at Rs62.76 per US dollar, the KSE index at 15,125 with market capitalization at $74 billion, inflation at 20.6 per cent and the country's debt burden on a declining path. The government itself acknowledged in the same document that "the macroeconomic situation deteriorated significantly in 2007/08 and the first four months of 2008/09 owing to adverse security developments, large exogenous price shocks (oil and food), global financial turmoil, and policy inaction during the political transition to the new government". (Para 3 of the MEFP, November 20, 2008)



What went wrong? Why one of the fastest growing economies in the Asian region until two years ago has been totally forgotten in the region? Firstly, the speed and dimension of exogenous price shocks (oil and food) were of extraordinary proportions. Secondly, the present government found itself totally ill-prepared and clueless in addressing the challenges arising out of the shocks. While rest of the world was taking corrective measures and adjusting to higher food and fuel prices, Pakistan lurched from one crisis to another.



Despite peaceful election and a smooth transition to a new government, political instability persisted. For a protracted period there were no finance, commerce, petroleum and natural resources and health ministers in the country. The government lost six precious months in finding its feet. It gave the impression of having little sense of direction and purpose. A crisis of confidence intensified as investors and development partners started to walk away. The stock market nosedived, capital flight set in, foreign exchange reserves plummeted and the Pakistani rupee lost one-third of its value. In short, Pakistan's macroeconomic vulnerability had grown unbearable. It had no option but to return to the IMF for a bailout package. There were no Plan A, B and C. There was only one plan, that is, to return to the IMF.

While the country was moving rapidly towards the IMF, the ministry of finance had prepared the plan to bring $4 billion by June 30, 2008 through four transactions. A kick-off meeting was scheduled on April 23, 2008 at the ministry to give a final touch to the various roadshows. These transactions were canceled on April 20, 2008. Who ordered the cancellation of $4 billion transaction? This cancellation prompted balance of payment crisis and the rest became history.

The economy continues to remain in intensive care unit and is breathing thanks to the injections from the IMF, World Bank and Asian Development Bank. The economy is not on the radar screen of the government and as such the economic managers have no relevance in the current political set up. The exit of Shaukat Tarin is a classic example. At least he tried his level best to inject financial discipline but paid the price of teaching prudent financial management. No matter who replaces Shaukat Tarin, the economy would continue to lurch from one crisis to another until and unless the government brings the economy at the center stage.

Dr. Ashfaque Hasan Khan is the Dean of Business School at the National University of Science and Technology in Islamabad, Pakistan.


Riaz Haq's Comments: In rural Pakistan where about 60% of Pakistanis live, people spend 55% of their income on food, according to a World Resources Institute (WRI) report.

The bottom two BOP (Base of Income Pyramid) groups alone account for more than 50% of national food spending in Pakistan. Average annual food spending per household in the BOP in Pakistan is $2,643. While BOP3000 households have 6 times as much income on average, they outspend BOP500 households in the food market by a ratio of only 2:1 in Cameroon, 2.3:1 in South Africa and Pakistan, 2.4:1 in Kazakhstan, 1.9:1 in Uzbekistan, and 3:1 in Peru.

Currently, food inflation in Pakistan is running at 15.49 percent, hitting the poor the hardest.

Here's a video clip of British Writer William Dalrymple speaking about Pakistan at a recent Intelligence Squared debate:



Here is a recent video clip of former President Muharraf talking about the power crisis in Pakistan:



Related Links:

Incompetence Worse Than Corruption in Pakistan

Pakistan's Circular Debt and Load Shedding

Pakistan Planning Commission

US Fears Aid Will Feed Graft in Pakistan

Pakistan Swallows IMF's Bitter Medicine

Shaukat Aziz's Economic Legacy

Pakistan's Energy Crisis

Karachi Tops Mumbai in Stock Performance

India Pakistan Contrasted 2010

Pakistan's Foreign Visitors Pleasantly Surprised

After Partition: India, Pakistan and Bangladesh

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Pakistan's Choice: Talibanization or Globalization

Pakistan's Financial Services Sector

Pakistan's Decade 1999-2009

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

BSE-Key Statistics

Pakistan's Multi-Billion Dollar IT Industry

India-Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis

IMF-Pakistan Memorandum of Economic and Financial Policies